“CFO Signals” Report – Excerpts

Recently Deloitte released their “CFO Signals” “High-Level Summary” report for the 3rd Quarter of 2017.

As seen in page 2 of the report, there were 160 survey respondents.  As stated:  “Each quarter (since 2Q10), CFO Signals has tracked the thinking and actions of CFOs representing many of North America’s largest and most influential companies.

All respondents are CFOs from the US, Canada, and Mexico, and the vast majority are from companies with more than $1 billion in annual revenue. For a summary of this quarter’s response demographics, please see the sidebars and charts on this page. For other information about participation and methodology, please contact nacfosurvey@deloitte.com.”

Here are some of the excerpts that I found notable:

from page 3:

Perceptions

How do you regard the current/future status of the North American, Chinese, and European economies? Perceptions of North America declined, with 64% of CFOs rating current conditions as good (still high), and 45% expecting better conditions in a year (down from 58% last quarter). Perceptions of Europe rose to 29% and 32%; China was flat at 32% and 30%. Page 6.

What is your perception of the capital markets? Eighty-three percent of CFOs say debt financing is attractive (down slightly from 85%). Attractiveness of equity financing rose for public company CFOs (from 42% to 48%) and decreased for private company CFOs (from 46% to 35%). Eighty-three percent of CFOs now say US equities are overvalued—a new survey high. Page 7.

Sentiment

Overall, what risks worry you the most? CFOs voice growing concerns about US political turmoil and geopolitical conflict; talent challenges again top CFOs’ internal worries, and technological change is a rising concern. Page 8.

Compared to three months ago, how do you feel about the financial prospects for your company? The net optimism index declined from last quarter’s +44 to +29 this quarter. About 45% of CFOs express rising optimism (down from 55%), and 16% express declining optimism (up from 11%). Page 9.

Expectations

What is your company’s business focus for the next year? CFOs indicate a strong bias toward revenue growth over cost reduction (60% vs. 20%) and investing cash over returning it (56% vs. 14%). They shifted back to a bias toward new offerings over existing ones (42% vs. 34%), and indicated a bias toward current geographies over new ones (62% vs. 19%). Page 10.

Compared to the past 12 months, how do you expect your key operating metrics to change over the next 12 months? Revenue growth expectations remain above the two-year average at 5.7% (up from 5.6% last quarter). Earnings growth slid from 8.7% to 7.9%, but remains above the two-year average. Capital spending growth fell from 9.0% to 7.3%, while domestic hiring growth rose from 2.1% to 2.6%. US CFOs trailed in almost all metrics. Page 11.

from page 9:

Sentiment

Coming off a survey high two quarters ago, optimism continued to decline— largely on growing pessimism in the US; Healthcare/Pharma and Technology improved, but Manufacturing and

(Please note that all responses were collected prior to Hurricane Harvey.)

This quarter’s net optimism declined significantly from last quarter’s +44 to a stillstrong +29. About 45% of CFOs expressed rising optimism (down from 55%), and 16% cited declining optimism (up from 11%).

Net optimism for the US declined sharply from last quarter’s +47 to +28 this quarter. Canada rose from +20 to +31, while optimism in Mexico declined from +50 to +39.

Healthcare/Pharma optimism rose sharply from +33 to +57, and Technology rose from +27 to +46. On the other hand, Manufacturing optimism fell sharply from +52 to +22, and Energy/Resources fell from +47 to just +19.

Please see the appendix for charts specific to individual industries and countries.

from page 11:

Expectations

Growth in key metrics, year-over-year

Bolstered by Canada and Mexico, domestic hiring surged and other metrics remain strong.

Earnings growth declined to 7.9% from last quarter’s 8.7%. The US declined but remained above its two-year average. Canada declined but remains strong. Mexico sits at its highest level in a year. Energy/Resources and Technology lead; Healthcare/Pharma and T/M/E trail.

Capital investment growth fell to 7.3% from 9.0%, still among its five-year highs. The US declined but remains above its two-year average. Canada declined but remains strong.  Mexico fell below its two-year average.  Energy/Resources, Healthcare/Pharma, and Financial Services are highest; Services, Technology, and Manufacturing are lowest.

Domestic hiring growth spiked to 2.6% from 2.1%. Canada hit its second-highest level in three years. Mexico rose to its highest level in a year. The US trails but hit its highest level in two years. Technology and Retail/Wholesale lead, while Healthcare/Pharma and Manufacturing trail. Wage pressures are evident in Mexico.

Please see the appendix for charts specific to individual industries and countries.

Among the various charts and graphics in the report are graphics depicting trends in “Own Company Optimism” on page 9 and “Economic Optimism” found on page 6.

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC (revsd.com) is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

Earnings Estimates Trends

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of September 15, 2017:

from page 21:

(click on charts to enlarge images)

S&P500 projected EPS

from page 22:

S&P500 EPS trends

_____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of September 19, 2017, titled “Trends Of S&P500 Earnings Forecasts

_____

RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

The September 2017 Wall Street Journal Economic Forecast Survey – Notable Aspects

The September 2017 Wall Street Journal Economic Forecast Survey was published on September 7, 2017.  The headline is “WSJ Survey:  Economists Expect Next Fed Rate Increase in December.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

An excerpt:

Most economists in the latest Wall Street Journal survey expected the Federal Reserve would next raise short-term interest rates in December, and most said Janet Yellen should get a second term as the central bank’s chairwoman.

Almost three quarters of the business and academic economists surveyed in the latest poll said President Donald Trump should nominate Ms. Yellen to stay on after her current term expires in early February. Several economists said that keeping her on the job would provide continuity and reassure markets during uncertain times.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 16.08%. The individual estimates, of those who responded, ranged from 0% to 35%.  For reference, the average response in August’s survey was 15.00%.

As stated in the article, the survey’s respondents were 56 academic, financial and business economists.  Not every economist answered every question.  The survey was conducted September 1-5.

The current average forecasts among economists polled include the following:

GDP:

full-year 2017:  2.3%

full-year 2018:  2.4%

full-year 2019:  2.0%

Unemployment Rate:

December 2017: 4.3%

December 2018: 4.1%

December 2019: 4.2%

10-Year Treasury Yield:

December 2017: 2.49%

December 2018: 3.02%

December 2019: 3.28%

____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of September 8, 2017, titled “The September 2017 Wall Street Journal Economic Forecast Survey

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

Earnings Estimates Trends

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of August 11, 2017:

from page 23:

(click on charts to enlarge images)

S&P500 EPS projections CY2017 and CY2018

from page 24:

S&P500 Annual EPS Actual And Forecast

_____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of August 17, 2017, titled “Trends Of S&P500 Earnings Forecasts

_____

RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

The August 2017 Wall Street Journal Economic Forecast Survey – Notable Aspects

The August 2017 Wall Street Journal Economic Forecast Survey was published on August 10, 2017.  The headline is “WSJ Survey:  Most Economists Expect Next Fed Rate Increase in December.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

An excerpt:

Economists surveyed by The Wall Street Journal this month see the Federal Reserve raising interest rates once more in 2017 and three times in 2018, a view that matches the Fed’s own projections.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 15.00%. The individual estimates, of those who responded, ranged from 0% to 35%.  For reference, the average response in July’s survey was 14.78%.

As stated in the article, the survey’s respondents were 62 academic, financial and business economists.  Not every economist answered every question.

The current average forecasts among economists polled include the following:

GDP:

full-year 2017:  2.2%

full-year 2018:  2.4%

full-year 2019:  1.9%

Unemployment Rate:

December 2017: 4.2%

December 2018: 4.1%

December 2019: 4.2%

10-Year Treasury Yield:

December 2017: 2.60%

December 2018: 3.03%

December 2019: 3.31%

____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of August 10, 2017, titled “The August 2017 Wall Street Journal Economic Forecast Survey

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

Earnings Estimates Trends

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of July 14, 2017:

from page 23:

(click on charts to enlarge images)

2017 & 2018 S&P500 EPS estimates

from page 24:

S&P500 EPS trends

_____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of July 19, 2017, titled “Trends Of S&P500 Earnings Forecasts

_____

RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

The July 2017 Wall Street Journal Economic Forecast Survey – Notable Aspects

The July 2017 Wall Street Journal Economic Forecast Survey was published on July 13, 2017.  The headline is “Forecasters Lower Economic Outlook Amid Congressional Gridlock.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

Two excerpts:

Forecasters in The Wall Street Journal’s monthly survey of economists marked down their outlooks for growth, inflation and interest rates this month, a partial reversal of a postelection bump.

also:

Forecasters assess whether they think the economy is more likely to outperform or underperform their forecasts. The number of economists seeing those risks to the downside climbed to 57% in this month’s survey, the highest since before the election. That’s up from 51% last month and 37% just two months ago.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 14.78%. The individual estimates, of those who responded, ranged from 0% to 33%.  For reference, the average response in June’s survey was 15.80%.

As stated in the article, the survey’s respondents were 63 academic, financial and business economists.  Not every economist answered every question.  The survey occurred on July 7, 2017 to July 11, 2017.

The current average forecasts among economists polled include the following:

GDP:

full-year 2017:  2.3%

full-year 2018:  2.4%

full-year 2019:  1.9%

Unemployment Rate:

December 2017: 4.3%

December 2018: 4.1%

December 2019: 4.3%

10-Year Treasury Yield:

December 2017: 2.65%

December 2018: 3.12%

December 2019: 3.39%

____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of July 13, 2017, titled “The July 2017 Wall Street Journal Economic Forecast Survey

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

“CFO Signals” Report – Excerpts

Recently Deloitte released their “CFO Signals” “High-Level Summary” report for the 2nd Quarter of 2017.

As seen in page 2 of the report, there were 132 survey respondents.  As stated:  “Each quarter (since 2Q10), CFO Signals has tracked the thinking and actions of CFOs representing many of North America’s largest and most influential companies.

All respondents are CFOs from the US, Canada, and Mexico, and the vast majority are from companies with more than $1 billion in annual revenue. For a summary of this quarter’s response demographics, please see the sidebars and charts on this page. For other information about participation and methodology, please contact nacfosurvey@deloitte.com.”

Here are some of the excerpts that I found notable:

from page 3:

Perceptions

How do you regard the current/future status of the North American, Chinese, and European economies? Perceptions of North America declined slightly, with 65% of CFOs rating current conditions as good (near the four-year high) and 58% expecting better conditions in a year. Perceptions of Europe improved to 17% and 30%, while China rose strongly to 28% and 32%. Page 6.

What is your perception of the capital markets? Eighty-five percent of CFOs say debt financing is attractive (up from 81% last quarter), while attractiveness of equity financing held steady for public company CFOs (at 42%) and rose for private company CFOs (from 38% to 46%). Seventy-eight percent of CFOs now say US equities are overvalued—just below last quarter’s survey high. Page 7.

Expectations

What is your company’s business focus for the next year? CFOs indicate a strong bias toward revenue growth over cost reduction (63% vs. 18%), and investing cash over returning it (62% vs. 16%). They shifted back to a bias toward existing offerings over new ones (46% vs. 32%), and again increased their bias toward current geographies over new ones (72% vs. 14%). Page 10.

Compared to the past 12 months, how do you expect your key operating metrics to change over the next 12 months? Revenue growth expectations rose from 4.3% to 5.6% and are above their two-year average. Earnings growth rose to 8.7%, up from 7.3% and well above the two-year average. Capital spending growth, which skyrocketed last quarter, slipped from 10.5% to a still high 9.0%. Domestic hiring growth held steady at 2.1%. Page 11.

from page 9:

Sentiment

Coming off a survey high last quarter, own-company optimism remains strong on very high optimism in the US and Mexico; Manufacturing and Services are high, and Energy/Resources rebounded.

This quarter’s net optimism declined from last quarter’s survey-high +50 to a still-high +44. Nearly 55% of CFOs expressed rising optimism (down from 60%), and 11% cited declining optimism (up from 10%).

Net optimism for the US declined from last quarter’s +58 to +47 this quarter. Canada fell from +40 to +20, while optimism in Mexico bounced back very strongly from -71 to +50.

Manufacturing and Services are again above +50, while Energy/Resources rose significantly to +47. Technology and Financial Services declined significantly, but both are still strong by historical standards. T/M/E is negative, but the sample size is very low this quarter.

Please see the full-detail report for charts specific to individual industries and countries.

from page 11:

Expectations

Key growth metrics remain relatively strong, bolstered by Canada and Mexico; the outlook for Energy/Resources and Healthcare/Pharma improved significantly.

Revenue growth expectations rose from 4.3% to 5.6% and are above their two-year average. US expectations continued to rise. Canada rose to a five-year high and Mexico bounced back from a two-year low. Energy/Resources rose to its survey high, and Healthcare/Pharma bounced back from last quarter’s survey low.

Earnings growth expectations are up to 8.7% from last quarter’s 7.3% and hit a twoyear high. All geographies improved significantly. Manufacturing is at its highest level in two years; Healthcare/Pharma bounced back strongly from last quarter’s three-year low.

Capital investment growth expectations fell to 9.0% from 10.5%, but still sit at their secondhighest level in five years. Canada and Mexico nearly doubled, but US expectations fell. Energy/Resources is again near its survey high. Healthcare/Pharma and Services are both up sharply; Technology declined significantly.

Domestic hiring growth held steady at 2.1%.  Canada bounced back from last quarter, and the US declined slightly. Healthcare/Pharma is highest of the industries, with Manufacturing the lowest (despite sitting near its two-year high).

Among the various charts and graphics in the report are graphics depicting trends in “Own Company Optimism” on page 9 and “Economic Optimism” found on page 6.

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC (revsd.com) is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

Earnings Estimates Trends

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of June 16, 2017:

from page 23:

(click on charts to enlarge images)

S&P500 EPS forecast trends

from page 24:

S&P500 annual EPS

_____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of June 20, 2017, titled “Trends Of S&P500 Earnings Forecasts

_____

RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

The June 2017 Wall Street Journal Economic Forecast Survey – Notable Aspects

The June 2017 Wall Street Journal Economic Forecast Survey was published on June 8, 2017.  The headline is “Unresolved U.S. Debt Ceiling Casts a Shadow Over Many Forecasters’ Economic Outlooks.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

An excerpt:

Forecasters in The Wall Street Journal’s monthly survey have raised their assessments of the risk facing the U.S. economy. For the first time since the presidential election, a majority of economists in the survey are concerned the economy could do worse than forecast.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 15.80%. The individual estimates, of those who responded, ranged from 0% to 33%.  For reference, the average response in May’s survey was 15.27%.

As stated in the article, the survey’s respondents were 60 academic, financial and business economists.  Not every economist answered every question.  The survey occurred on June 2, 2017 to June 6, 2017.

The current average forecasts among economists polled include the following:

GDP:

full-year 2017:  2.3%

full-year 2018:  2.4%

full-year 2019:  2.0%

Unemployment Rate:

December 2017: 4.3%

December 2018: 4.1%

December 2019: 4.3%

10-Year Treasury Yield:

December 2017: 2.66%

December 2018: 3.20%

December 2019: 3.57%

____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of June 9, 2017, titled “The June 2017 Wall Street Journal Economic Forecast Survey

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.